A European Central Bank (ECB) rate cut will likely lure return hungry investors to South Africa because the JSE’s reputation for having well run companies who pay consistent dividends and have demonstrated good earnings growth for years will put it in the front running as the investment destination of choice according to a recent article in BusinessDay.

ETM market analyst Sean McCalgan also commented that the local bond market has received firm support from offshore clients this year with bond purchases outpacing equity demand for the first time last month. Specifically, foreign purchases of local bonds totaled R9.3bn in May — the highest level since February 2013 and a trend that will likely continue if European bond yields were compressed to 0.1% by an interest rate cut.

South Africa’s local benchmark R186 bond also offers returns as high as 8%.